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Fears grow of global trade war


Trade war fears increased this week with US president Donald Trump threatening new tariffs on $200bn of Chinese imports, and European Union tariffs coming into force on €2.8bn of US goods.

Meanwhile, the pound touched a low for the year of $1.31 ahead of the Bank of England’s interest rate meeting on Thursday.

The BoE kept the base rate at 0.5%. But expectations for an August rate rise increased on news that BoE chief economist Andy Haldane was among those who had voted for a rise this week.

Markets priced in a 68% chance of a rate rise in August, up from 48% previously.

Strong income tax and VAT receipts helped cut the government’s deficit to a 13-year low, according to the Office for National Statistics.

In the latest in a run of better-than-expected public finance figures, borrowing during May was £5bn, £2bn lower than in the same month last year.

“It’s early days yet, but if this is sustained, borrowing would undershoot the OBR’s 2018-19 forecast by £9bn or so over the year as a whole,” said Andrew Wishart, UK economist at Capital Economics.

The figures are likely to be welcomed by Philip Hammond, the chancellor, who needs to find extra funding for the government’s promised increase in NHS spending. 

UK manufacturers saw their orders increase strongly in the quarter to June while output growth was its highest since December, according to a CBI survey.

One-third of firms said their total order books were above normal for the period, while 20% said they were below normal – giving a balance of 13%.

However, longer-term growth is expected to be “subdued” due to uncertainty and weaker consumer spending power, said the CBI.

The survey findings indicate “the manufacturing sector’s recovery still has legs,” said Samuel Tombs from Pantheon Macroeconomics.

Asking prices on UK residential properties edged higher in June as sales improved from the start of the year, according to Rightmove.

The property website found that asking prices were 0.4% higher than in May, and 1.7% higher than a year ago.

In London, however, asking prices were 0.9% lower than in May, and 1% down from a year ago. 

Click here to read this week's Market Roundup and Company Focus on Ashstead

Important Notes:

Main source of information: Company Report and Accounts, Bloomberg


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